Aww, the same thing is also happening here in the Philippines. Sidewalks turned into selling areas, sometimes foods, clothes, etc., and this happens mostly in cities. It's really annoying, and even though there are road-widening projects from the government, it did not change a thing. It just added another bunch of street vendors, or motorbikes and cars are parked in the spaces.
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I always say that when the government decides to upgrade a road it is merely providing more space for people to set up food carts and markets thereby not improving the flow of cars, bikes, and people in any way. There needs to be enforcement or nothing will change.